Question 1

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

Accepted Answer

A) Wheeler-Lea Act 
B) Clayton Act 
C) Sherman Act 
D) Celler-Kefauver Act 
A) Wheeler-Lea Act 
B) Clayton Act 
C) Sherman Act 
D) Celler-Kefauver Act

Question 2

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the

Accepted Answer

A) Food and Drug Administration. 
B) Federal Energy Regulatory Commission. 
C) Federal Communications Commission. 
D) 50 state public utility commissions. 
A) Food and Drug Administration. 
B) Federal Energy Regulatory Commission. 
C) Federal Communications Commission. 
D) 50 state public utility commissions.

Question 3

The table shows market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.A
Structuralist would most likely assert that there is a violation of antitrust law in which industry?

Accepted Answer

A) Alpha 
B) Beta 
C) Cappa 
D) Delta 
A) Alpha 
B) Beta 
C) Cappa 
D) Delta

Question 4

In the U.S.Steel case, the court ruled that

Accepted Answer

A) even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act. 
B) only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act. 
C) when made by dominant firms, tying contracts are illegal, per se. 
D) the company violated the Clayton Act and therefore should be dissolved into several competing firms. 
A) even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act. 
B) only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act. 
C) when made by dominant firms, tying contracts are illegal, per se. 
D) the company violated the Clayton Act and therefore should be dissolved into several competing firms.

Question 5

Tying agreements

Accepted Answer

A) establish common boards of directors for previously competing firms. 
B) obligate a purchaser of product X to also buy product Y from the same seller. 
C) allow manufacturers to specify the retail prices of their products. 
D) prohibit firms from selling their products outside of specified geographic areas. 
A) establish common boards of directors for previously competing firms. 
B) obligate a purchaser of product X to also buy product Y from the same seller. 
C) allow manufacturers to specify the retail prices of their products. 
D) prohibit firms from selling their products outside of specified geographic areas.

Question 6

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

Accepted Answer

A) change in the business practices of AT&T. 
B) cease-and-desist order. 
C) breakup of AT&T into several smaller firms. 
D) takeover of AT&T by another company. 
A) change in the business practices of AT&T. 
B) cease-and-desist order. 
C) breakup of AT&T into several smaller firms. 
D) takeover of AT&T by another company.

Question 7

The Sherman Act

Accepted Answer

A) was declared unconstitutional in 1895. 
B) provided for government regulation of the railroads. 
C) declared monopoly and restraints of trade to be illegal. 
D) exempted the railroad and communications industries from the antitrust laws. 
A) was declared unconstitutional in 1895. 
B) provided for government regulation of the railroads. 
C) declared monopoly and restraints of trade to be illegal. 
D) exempted the railroad and communications industries from the antitrust laws.

Question 8

The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

Accepted Answer

A) mergers. 
B) structure. 
C) regulation. 
D) behavior. 
A) mergers. 
B) structure. 
C) regulation. 
D) behavior.

Question 9

If a market is defined more broadly, then the chances that firms in that market will be found to be violating antitrust laws based on the "structuralist" perspective will increase.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following U.S.Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Accepted Answer

A) DuPont cellophane case of 1956 
B) U.S.Steel case of 1920 
C) Alcoa case of 1945 
D) AT&T case of 1982 
A) DuPont cellophane case of 1956 
B) U.S.Steel case of 1920 
C) Alcoa case of 1945 
D) AT&T case of 1982

Question 11

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

Accepted Answer

A) injured private parties. 
B) state attorneys general. 
C) the U.S.Department of Labor. 
D) the U.S.Department of Justice. 
A) injured private parties. 
B) state attorneys general. 
C) the U.S.Department of Labor. 
D) the U.S.Department of Justice.

Question 12

The optimal amount of social regulation occurs where the marginal benefit of such regulation

Accepted Answer

A) equals the marginal cost. 
B) exceeds the marginal cost by the greatest amount. 
C) is zero. 
D) is at its maximum. 
A) equals the marginal cost. 
B) exceeds the marginal cost by the greatest amount. 
C) is zero. 
D) is at its maximum.

Question 13

A vertical merger involves a combining of one or more firms

Accepted Answer

A) as the result of one firm purchasing the assets of the other. 
B) that are operating in entirely different industries. 
C) operating at different stages of the production process in a particular industry. 
D) operating at the same stage of the production process. 
A) as the result of one firm purchasing the assets of the other. 
B) that are operating in entirely different industries. 
C) operating at different stages of the production process in a particular industry. 
D) operating at the same stage of the production process.

Question 14

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

Accepted Answer

A) preventing the natural monopoly from harming society through its monopoly pricing. 
B) garnering for society at least part of the cost reductions from being a natural monopoly. 
C) avoiding the reduction in output associated with monopoly power. 
D) eventually breaking up the monopoly to achieve competition within the industry. 
A) preventing the natural monopoly from harming society through its monopoly pricing. 
B) garnering for society at least part of the cost reductions from being a natural monopoly. 
C) avoiding the reduction in output associated with monopoly power. 
D) eventually breaking up the monopoly to achieve competition within the industry.

Question 15

The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

Accepted Answer

A) True 
 B)False

Question 16

Antitrust authorities are least likely to take action against

Accepted Answer

A) conglomerate mergers. 
B) horizontal mergers. 
C) interlocking directorates. 
D) price-fixing. 
A) conglomerate mergers. 
B) horizontal mergers. 
C) interlocking directorates. 
D) price-fixing.

Question 17

Critics of social regulation would argue that it

Accepted Answer

A) decreases prices. 
B) increases output. 
C) increases competition. 
D) decreases product innovation. 
A) decreases prices. 
B) increases output. 
C) increases competition. 
D) decreases product innovation.

Question 18

Overall, economists believe that deregulation of industries formerly subjected to industrial regulation

Accepted Answer

A) has been a clear failure. 
B) is neutral in its impact on society's well-being, creating minimal net benefits at best. 
C) has produced large net benefits for consumers and society. 
D) has produced sizable efficiency gains in the communications industry, but not in the transportation industry (railways, trucking, airlines). 
A) has been a clear failure. 
B) is neutral in its impact on society's well-being, creating minimal net benefits at best. 
C) has produced large net benefits for consumers and society. 
D) has produced sizable efficiency gains in the communications industry, but not in the transportation industry (railways, trucking, airlines).

Question 19

An example of a horizontal merger is one between an airline and

Accepted Answer

A) a chain of hotels. 
B) another airline. 
C) an aluminum company. 
D) a car rental company. 
A) a chain of hotels. 
B) another airline. 
C) an aluminum company. 
D) a car rental company.

Question 20

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Accepted Answer

A) IBM case of 1982 
B) Microsoft case of 1998 
C) Alcoa case of 1945 
D) AT&T case of 1982 
A) IBM case of 1982 
B) Microsoft case of 1998 
C) Alcoa case of 1945 
D) AT&T case of 1982

Exam 21: Antitrust Policy and Regulation

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the

The table shows market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.A Structuralist would most likely assert that there is a violation of antitrust law in which industry?

In the U.S.Steel case, the court ruled that

Tying agreements

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

The Sherman Act

The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

If a market is defined more broadly, then the chances that firms in that market will be found to be violating antitrust laws based on the "structuralist" perspective will increase.

Which of the following U.S.Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

The optimal amount of social regulation occurs where the marginal benefit of such regulation

A vertical merger involves a combining of one or more firms

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

Antitrust authorities are least likely to take action against

Critics of social regulation would argue that it

Overall, economists believe that deregulation of industries formerly subjected to industrial regulation

An example of a horizontal merger is one between an airline and

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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